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tv   The Kudlow Report  CNBC  March 5, 2014 7:00pm-8:01pm EST

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stocks they have been wrong on for hundreds and hundreds of points. my job is to spot the froth and tell you it's speculative. juice for you right it for you money." i'm jim crepe are. i will see you tomorrow. no deal in paris. the u.s. sends fighter jets to nato bases in europe, this as secretary of state john kerry and the russian foreign minister meet in france, but russia is still not planning to pull out of the crimea. however, washington prepares a series of tough sanctions on moscow, the europeans have suddenly stiffened their spines. vladimir putin may be pushed into a corner that he doesn't like. we are going to have the latest on all of that. plus another day, another major obamacare delay, just unilaterally declared by team obama. now the administration will allow insurance companies to sell those canceled, quote, substandard insurance plans for another two years.
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that makes three. those stories and much more coming up on "the kudlow report", beginning right now. secretary of state john kerry meets with russia's foreign minister sergei lavrov, but so far lavrov is unling to meet with the new ukrainian foreign minister. john harwood has more. >> good evening, larry. the u.s. positioned some planes, a u.n. envoy was harassed in crimea. there was a pledge for an aid package to go with $1 billion from the united states that's under discussion. john kerry met with his ukrainian and russian counterparts and compressed optimism that those talks would continue and bear fruit. >> we agreed to continue intense
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discussions in the coming days with russia, with the ukrainance, in order to see how we can help normalize the situation, stabilize it and overcome the crisis. all parties agreed today that it is important to try to resolve these issues through dialogue. >> of course, the question is when the russian and ukrainian foreign ministers will meet. russia is resisting that, because they don't recognize the new ukrainian government. meanwhile, members of congress tomorrow are going to start debating a sanctions resolution as a means of putting pressure on russia to take that off-ramp that u.s. officials are trying to get them to take, larry. >> john, in that rambling semi-news conference that putin had yesterday, he did indicate, and this was picked up by some papers, that he might be willing to accept the results of the spring eye selectio-- elections
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kiev government. it sounds like putin is backing off just a wee bit. >> i agree with you, larry. certainly that's how the administration interpreted that. president obama said yesterday he's pausing to reflect on what he's done so far, so i think there is some hope that having made his point in the crimea, that vladimir putin may not go further and may look for defuse this crisis. that's the opportunity that john kerry is trying to make rear. >> john heart wid, thank you ever so much. many thanks to john as always. so will the threat of economic sanctions, asset seizures, from the president and secretary kerry enough to make russia pull out of crimea? here now is nbc news analyst michael mcfall who just days ago departed as u.s. ambassador to russia to return to stanford university.
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also with us john herbs herbst. and gentlemen, thank you very much. paul, let me just ask you -- is putin softening his position? because -- because i don't believe putin wants to be booted out of the g-8, and i don't believe putin wants to be subject to oleo gashal seeshies bans, and other things that would embarrass him? >> i think he's keeping his options open. i watched the press conference closely yesterday. on the one hand, he did open the door, talking about maybe recognizing a new legitimate government after elections in ukraine. that was a good sign. he talked about this february 21st agreement, and how the parties need to come back to that, including the deposed president yanukovych, but he also in the next breath talked
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about how this is a revolution, and therefore russia is not obligated to meet its treaty obligations vis-a-vis the ukraine in terms of commitments to territorial integrity of the ukraine. he had both messages there. i don't think he's decided ultimately what his end game is. >> well, okay, but let me follow up. you've just come from your turn as russian ambassador. you know, this business about the ukraine elections were phony, and he won't recognize the government, that's pretty thin reed stuff. that's not going to carry much, and he knows that. >> he knows it, but they don't like the way that yanukovych fled. i was in my job just a week ago. i saw the senior government people deal with foreign policy even before they moved into crimea. the overwhelming message i heard from them, including minister lavrov is that yanukovych is weak, how did he allow this to happen? they don't like the current government in kiev.
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that's why minister lavrov didn't meet with the acting foreign minister. they want to see if they can get a better deal in terms of the composition of the government and the changes to the constitution, by the way. that might give their folks more power in the ukraine should they change the constitution. >> but john herbst, yanukovych, if i'm pronouncing that right, he and his cohorts killed how many people in the streets of kyle yes? 80? >> that's right, scores. >> the europeans have now essential put a price on the head of yanukovych and 17 others by saying if they show up, they'll have their assets seized and other sanctions, whatever they can do? i mean, these guys are international criminals now. that's the position that putin is in, he's backing international criminals who murdered all these protesters in the streets. >> well, it's not just that. the russian hands are dirty in connection with that violence. there's evidence that the snipers who were firing were not -- the snipers were firing
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to kill were not ukrainance, but someone else, mercenaries the where did they come from? we all remember that mr. the senior adviser to putin called for yanukovych to use force to clear the square. there are reports in ukraine from a mr. maskal, a member of the muir radda, that a member of the russian intelligence was in -- so russia's hands are not clean. they were encouraging yanukovych to use violence. now of course they have invaded crimea. >> we'll get to crimea in a second, but i want to ask charles, i think another factor, important factor today is the role of the european union people who sounded extremely wussy before, but suddenly found their backbone and spine and now they are talking about asset seizures of these russian criminals, and on top of that,
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they're talking about a $15 billion loan of some sort. in other words, financial assistance. this is -- now the u.s. is standing with the eu, charles. i think that puts putin on the defensive. >> i would agree, larry. i think this creates a different balance of power in the situation. you know, on the one hand western europe is quite dependent on russia for gas and oil particularly germany. on the other hand there's an interdependence factor that may mitigate the potential for continued aggressiveness by putin. he not only provides the gas and oil to western europe, but he depends on those markets for foreign exchange. the russian economy is vulnerable. ironically out of all of this, the extreme as a rule neblt and free fall of the ukrainian economy may eventually destabilize, because the strong support has definitely increased over the last few days. >> i couldn't agree more. this is a big thing. russia needs the foreign exchange. their economy is in terrible
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shape. you're exactly right. mr. mcfall, let me pursue this more. at this point, you tell me technically, i don't know, at some point all putin has to do is to tell his mill their people in crimea to stand down and go back to the bases and the barracks. that's all he has to do. will he do it? he's got the whole world against him. he is increasingly isolated, mr. mcfall. he has no place to go. his bravado is shot. nobody believes his phony argument that his guy in kiev was a good guy. all he has to do is say go back to the barracks. it will happen soon, is it not? >> it's not going to happen unless he gets something in return. you've been dealing with prime minister putin and president putin as a government official for the last five years, followed his career before as an academic. i would be shocked if he said, you're all right, i agree, i'm
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going to have my soldiers go home. he won't do that. >> what does he want, ambassador? >> well, first of all, as i said before, i don't think he knows what he wants. i think he was very upset that he lost his guy, yanukovych in kiev, and this was a reckless kind of spontaneous tactical move to go into crimea. now they're considering. i think, you saw what secretary kerry said about the conversation today. that leads me to believe that, you know, he said we have some creative ideas that we discussed with foreign minister lavrov. you know, what could those creative ideas be? perhaps a return to this agreement so that there would be new elections. perhaps a new constitution that would make ukraine more federal system of government, but he won't just walk away from this. that i'm totally sure of. he's just not going to say everybody's right, i'm going to walk away. that is not consistent with him.
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>> all right. you know him, i don't. you know the story, i don't. but increasingly he is going to be one isolated guy. john herbst, i want to talk about putin's isolation. it's kind of a weird story. david ignatius in "the washington post" wrote a great column about this. if you look at the former soviet bloc, most of them, including the big ones move to the west. they move to nato and the european union. we were going through it this morning. the big guys czech republic, hungary estonia, latvia, i don't want to read them all, they all went west. now putin suddenly wants to go east to salvage something called the soviet or russian empire. it can't be done. they want to go where the money is, the money is west. they want to go where the new center of gravity is west, that's nato, the european union. there's no way, john, that putin can win this. no way. >> i agree with you completely. you develop wealth by reaching
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out to the world market the way the chinese have. the russian notion of eurasian -- what putin is trying to do by pushing udrain east is not in ukraine's interest, it's not in russia's interest. it would ensure russia not being able to compete economically. that's a formula for failure. charles, a formula for failure, give you the last shot at this. it's call the mcgritsky act ord -- it gives the power to sanction visas, those who are in can be thrown out or not let them in. first of all, the haas will strengthen that, that's what they said. second i believe that president obama, who i think has done very well in this. i have supported him throughout this. i think he's done very well.
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he'll probably support that. he didn't at first, but now i think he will, and bakley the o olig arches will have trouble banking. they'll get to putin at some point, aren't they? >> i think that trade sanctions take a while, but financial sanctioning can have short-term impact. i think the potential is real that financial actions are enacted previously in elaboration, but even if it's just u.s. action, because of the integration of western jumpian banks into the u.s. financial system, it has the potential for immediate impact of russian corporations, russian citizens, the russian economy. but i would say one other thing. the world economy is still fragile. i think's we play thus the scenari scenarios, we have to be concerned that the world economic recovery doesn't need another bout of instability
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here. i think markets are a bit more on edge globally than it revealed by the trading of the last couple days, so i think that as everyone moves forward, we have to be alert to the fact that global recovery is still a very fragile animals at this point >> i think that's a great point. global economy in a global markets are skittish. ambassador mcfall, i agree with you, sir, we can't be sure what putin is going to do. i think that's good insight. i'm speculating. that's what i kind of do for a living when we have stories like this, but i sense from all the reports that we're getting that somehow putin is moving back, he's moving back, he's moving away from the edge. however, sir, i can't by dead wrong. >> and the point about financial sanctions is key. if i could just add, it's the financial sanctioning that will be key. because you're absolutely root right. i just got off the phone with a major russian multimillionaire. people are skittish. they're afraid of that. if they can't trade in their dollars with their bank accounts in london and in new york, that
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makes them very nervous. that's where we have leverage ufrlts and if they can't get in and out of the the usa, they'll be one teed-off group. i've been at dinner parties with them. i don't like them, i don't like anything about them, but putin's got to live with them. that's not a small thing. i've got to get out. you guys have been great. thank you ever so much. i hope you return and help us parse through this. ambassador mcfall, john herbst and mike -- the president is making more big unilateral changes to the health care law. we'll have the latest for you next up. later on, things got ugly today on capitol hill, as former i.r.s. official lois lerner again took the fifth in a house hearty. you'll hear how heated and nasty it got between two top congressmen. speaking of a skittish world don't forget that free market capitalism is the best path to prosperity. those countries of the former
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soviet bloc that went west into nato and the european union get the capitalist story. mr. putin does not. i'm kudlow. we'll be right back. ♪ [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪
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new obamacare changes are coming out today. the administration now says it will allow insurers to keep people on the noncompliant health plans that were originally canceled. remember those very plans that president obama first promised you you could keep, then he said you couldn't keep it, well, now you can keep them again for three more years. this whole thing is a political ploy, in my opinion to try to shield vulnerable red-state democrats from any blowback in next fall's mid terms as those plans might be canceled again. here is health policy expert grace marie turner. if you like your plan, you can keep it. if you like your doctor, you can keep it, oops, then he said you couldn't, then he said oops i'll let you keep it for a year even though it's a pain in the neck for the insurance companies and
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may be more expensive. now he says, oops, you can have it for two more years. what do you make of it? totally, larry, you're right. it's absolutely politics, throwing the health insurance industry that is doing their best to try to comply with this law in complete turmoil. it's political determined. democrats who are specially vulnerable senate democrats who voted for this law in 2010 are facing the voters for the first time many of them this fall, and they are desperate to top the carnage. tens of million of people stood to lose their small business health insurance policies, because they did not comply with all of the rules and mandates. so the president has waved his magic wand, or i guess his pen, and basically said okay, we'll let you keep those plans, but first of all the states have to agree, because they regulate health insurance and the health insurance companies have to
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agr agree. >> it's not easy for the insurance companies to reprocess them and the cost structure may change and the forecast may change. in effect the policies may wind up being more expensive. let me just say, i guess it was two weeks ago, i wrote a column and i said we should have a three-year moratorium on the entire obamacare plan. look what's happened. this is the three-year moratorium i was talking about it. i want it for everything. the business side is up to two years an rising. there should be no mandates, no insurance company bailouts, there should be no more timing changes. everything should stop in its tracks until we can go back, congress, whoever wins in 14 and '16, go back and redo this whole bloody thing. that's the amazing thing to me. he's doing the three-year
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moratorium i talked about. >> well, except for the $1 trillion in new taxes, and he has not yet postponed the individual mandate. so if you don't have health insurance, you are going to face penalties starting next april that is one of the most unpopular parts. >> right. i forgot. you're right. all this stuff should be frozen. i'm not being partisan. i have no idea who will win the eek electric. all i'm saying is nobody likes this anymore. obama doesn't like this anymore. his advisers don't like it anymore. his supporters don't like it anymore. the next will be state-run single payer and that's got to be stopped.
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the president has already changed this 20 times, most of them illegally. obama is repealing obama care with his pen illegally. the voter should do this through the representatives in congress to make it legal. what the president is doing is against the rule of law. we've got to do this through the process. you're right. basically what he's doing is putting off the uncomfortable parts of this until he gets out of office to leave the mess for the next person. and leave the overall taxes. you've got to go back to congress, which is a lawful body to deal with that. the president may not like it, but he's got to do that. that's my point with the moratorium ends.
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put a date on it, and people come up with new ideas. they may be very interesting. some of them may be democrat, some may be republican ideas, i hope to heck it's a freedom of health care with no mandates, but leave that aside. only the congress can make fundamental changes in a wall like this. that's my point. that's why we should stop it dead in its tracks. take a time-out. it's like on football. let's look at this on the instant replay, op the instant replay cameras should last three years. >> the house has passed legislation to delay the individual mandate. to allow people to keep the plans they have, and the president has a veto message, i'm going to veto this law if it were to get through the senate, and yet he does the same thing illegally that congress is trying to give him the authorization to do, because they too want to delay this. the logic is incomprehensible.
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>> that's the right word. and the senate won't even vote on this. >> no, they won't you and i could come up with a dozen senators who would like to vote on it, but it's too late. grace marie turner, thanks very much, as always. heading into the targeting scandal ended in an ugly scene. this is elijah cummings and darrell issa after issa gavelled the hearing to a close. would el have the whoa story after this. >> if you would sit down and allow me to ask questions, i am a member of the congress of the united states of america. i am tired of this!
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sign up for internet and voice and find out how to get four weeks of internet for free. comcast business. built for business. investigation into the i.r.s. targeting of conservative groups continued today. but the house hearing didn't exactly go as planned. our own cnbc's morgan brennan has the details. good evening. >> good evening, larry. congressman issa has tried to get lois lerner to talk, she's done so in the past and did so again today >> my counsel has advised me i have not waived my constitutional rights, and on his advice, i will decline to answer any question on the subject matter. i respectfully exercise my fifth amendment right. my fifth amendment right. my. i respectfully dlan to answer that question. >> reporter: in all she repeated that same line nine times.
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clearly frustrated chairman issa called an bankrupt end to the hearing. >> seeking the truth is the obligation of this committee. i can see no point in going further. i have no expectations that ms. lerner will cooperate with this committee and therefore we are adjourned. >> chairman, i have a state. mr. chairman, you cannot run a committee like this. you just cannot do this. this is -- we are better than that as a country, better than that as a committee. issa then excused all the witnesses, but said he would let elijah cummings make his statement. >> but first i would like to make some brief points. for the past year the centering accusation -- >> we're adjourned. close it down. >> but even without his microphone he continued to talk. that's when things really got hot. if you will sit down and allow me to ask a question, i am a member of the congress of the
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united states of america. i am tired of this. you cannot just have a one-sided investigation. this is absolutely something wrong with that, and it's absolutely un-american. >> hear hear. >> so after that issa walked off. cummings spoke for a few more minutes, but nothing got accomplished. lerner didn't testified, wasn't given immunity, and the committee and the rest of us still don't know her side of the targeting scandal. >> does it look lie darrell issa did sit down for a wee bit. i thought i saw that in your tape. anyway, my editorial, not users, mine. i wrote a column on this months ago, and i said she's not going to talk. she's going to continue to exercise the fifth, take the fifth. what should be done here is a special counsel. investigative committees can only go so far. other conservatives know that -- they're not keeping the issue alive. in fact they're kind of
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obscuring the issue, and i said special counsel, very limited definition, that they should have a special counsel to get to the bottom of this. they're not going to have that. darrell issa is a smart guy, but i think they played their cards wrong. morgan brennan, thank you very much. as i said before, russia generally an economic basket case, but that doesn't mean vladimir putin doesn't have an impressive list of american lobbying and pr firms on his payroll. eamon javers has a live report for us on that, next up on kudlow. we'll also take you to california where benjamin netanyahu is offering governor jerry brown a free market solution to that state's major drought problems. our josh lipton has a live report. stay on kudlow. we'll be right back. [ male announcer ] we know they're out there. you can't always see them. but it's our job to find them. the answers. the solutions.
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on the nbc sports live extra app, including the x1 platform from xfinity. comcast was honored to bring every minute of every medal of nbcuniversal's coverage to every screen. so what's next? rio 2016. welcome to what's next. comcast nbcuniversal. welcome back to court court. we've got two reporters standing right now. josh limit ton has been traveling in california today with israeli prime minister benjamin netanyahu, and eamon javers has been looking into who is working for vladimir putin here in the u.s. let's begin with eamon. >> they don't just have the embassy up on madison avenue, to
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carry out statecraft. they have a battle of lobbyists and pr people on retainer throughout the country, thanks to the foreign agents registration act, we can see who exactly is on the payroll. starting with the public relations firm ketchum. they were paid $1.5 million to do a variety of things, including distributing press releases, handling website and managing russia's twitter account. they also put together the op-ed ped in "new york times" last fall, submitted that to "new york times." also on the payroll maslansky & partners. they special in language massages and research. they were paid over $138,000 over six months as a subcontractor. also a subcontractor here, the law firm alston and bird.
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they were paid about $is 00,000 over six months, and venable, the law firm in washington paid $168,000 over six months. they were working on the gaspron export account with his for gazprom, the giant energy company majority controlled by the russian government. they were working both those accounts and setting up both. that's how it works in washington. >> are they all american citizens? >> they are, as far as i can tell. we called all of these firms for comments. none would call us back except for maslansky, who said they didn't see anything wrong working for the russians. we didn't have a chance to ask key questions like that, but looking at the bios on a lot of these web sites, it does appear that the majority of them are
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american citizens. >> if they're not, we can throw them out. this leads to another point i made at the top of the show. people coming in from russia or wherever, and i'm especially thinking about the oligarchs, who like to travel freely, there's the act that allows personal sanctions or revoke visas. basically either throw foreigners out or not let them in. the president has the authority. that bill was passed just a couple years ago. now it could be a powerful weapon. >> what is interesting here is the foreign agent's registration act that we used to get this information, all of it has to be publicly disclosed to the department of justice. that dates back to world war ii, and the whole effort there in passing that law was to figure out who was advocating for germany in the run-up and during world war ii. there's a long history to foreign countries hiring folks in washington. now, though, they have to disclose it and we're able to see everything above board on the documents at the department
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of justice. >> wonderful, fabulous report, eamonafter, can't thank you enough. let's go live to silicon valley for more on the prime minister's visit to california. good evening, josh. how is prime minister netanyahu? >> evening, larry. governor jerry brown and israeli prime minister benjamin netanyahu met today in mountainview, california, discussed cybersecurity, alternative energy and the drought here in california. netanyahu talked about the successes israel has had in becoming one of the most productive and profitable agricultural centers in the world. >> california doesn't need to have a water problem. by cooperating we can overcome this. we've proven it. it's not a possibility. it's a concrete result. >> israel is the world's leading innovator in turning dry lands intole forms, wick technique is
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desalination, where saltwater is treated and processed before turned into clean drinkal waters. the technologies is already building what would be the largest plant north of san diego when it's completed in 2016, that plant will produce 50 million gallons of water per day. why does california's drought matter to you, larry and frankly the rest of your viewers? remember california's central valley grows 99% of the nation's almonds. 49% of all lettuce farmed in this country. that really is just the start of your grocery list that relies on the golden state. california produced over $44 billion in fresh produce last year and the drought threatens to dry up 11 billion of that figure this year. larry? >> that's a big story. i like those numbers. one of the morals of the story here, one of the bottom lines to the story, josh, is that israel is such an amazing high-tech country. they're making inventions left and right.
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this is one of them, the desalination to deal with the water drought. israel is surging ahead. they're really a very capitalist country, and i'm glad they're giving us help in california. josh, thank you very much. appreciate it. we had a couple weak economic reports today that everybody is blaming the weather. what happens if friday's job report disappoints for the third month in a row. we'll talk to vince reinhardt. he'll give us the scoop, next up on "the kudlow report." iwe don't back down. we only know one direction: up so we're up early. up late. thinking up game-changing ideas, like this: dozens of tax free zones across new york state. move here. expand here. or start a new business here... and pay no taxes for 10 years.
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i want to get to this weather stuff in a minute. we have viewers out there. in your opinion, what are interest rates going to do? i want to start there. people worry about their mortgage rates, their car loan rates, the credit card rates. they don't see the fed in the way we see the fed. it's really a direct interest rates. what's your forecast? >> last time i checked, janelt yellen is going to go lower for longer. she will dover that about rates have fallen so far this year, that means in real terms. monetary policy was tighter this year than the year before that, and that would be the reason to tighten. if the fed is not tightening anytime soon, longer-term will move up only slowly. we're benefiting from the flight to safety, so they'll stay low. >> if the fed continues to slow down by bond buying, so-called
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tapering, and if they quit buying bonds over the course of this year, which i think you agree is likely, what does that do to interest rates? >> not really much itches if i'm thinking about getting a mortgage, should i get it now or should i wait? that's really the key question. >> so we see the ten-year yield only moving up very slowly. the tapering is old news. markets absorbed it, the fed is only slowly cutting into the asset purchases, and they have said they're not going to -- sell securities and reinvesting mature proceeds. our central bank will have a big balance sheet for a while. >> so the ten-year, which is somewhat aligned with mortgage rates, ends the year where? about 260 something now. >> below 3.5%. >> but up? >> it's going up. >> so people should get their mortgage now? buy their car now? >> even though she'll push out on the first tightening, as the
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year progresses, we'll get closer to that data. the other thing is market participants always get ahead of themselves. they come to expect tightening sooner and by more than the central bank wants to deliver to keep the expansion sustained. >> i'm one of them. i think higher short-term rate helped the economy. my friend john taylor and your friend john taylor. his taylor rule says the short-term rate should be 1.5% right now. your thought? >> and what the fed is doing for forward rate guidance is augmenting the fact they're stuck at zero by promising to keep the rate lower. >> that's right, so it's a dumb policy? you used to be a hard money guy when you were at the american enterprise institute. >> i'm a hard money guy, but i think thefold should achieve its goals. one of the goals was a 2% inflation rate. since inflation is almost half that, the fed has the opportunity to keep -- >> i think we should have price
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stability. every nickel of inflation is a tax hike on american consumers. >> so i -- >> i never heard of a central bank that wanted more inflation. >> i think the bank of japan qualifies on that score right now. i like the old volcker/greenspan definite 'tis -- when it doesn't affect the decision making of houses. >> because expectations stay low. and both of those guys looked at open market prices, look at commodity prices, gold prices. that was very important. weather, adp came out lousy today, private jobs report. now i see people knocking down their forecasts for friday's non-farm payrolls to 125,000. if we get 125,000, that would be the third straight lousy jobs month. a, do you think it's all weather? and b, if that happens, third
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straight lousy jobs month, will janet yellen do anything about it? >> okay. it's bad enough having to live through the weather. now we have to explain what it means in economic data. >> absolutely. >> we were lower than consensus going in. we had written down 140, when it was back when it was 150. we were not just a data observer, but a data collector. we have a group that does a real-time indicator of activity, using big data, surveys, internet traffic, and you see the geographic footprint. where the weather was lousy, the do you was lousy. when the weather improved, the data improved. so we think that it is mostly weather. that said, regionally there's some weakness, and also across some categories where you wouldn't think necessarily it should be weak, but we think that the economy -- >> so it's a mixed bag. >> so underneath your ice crust
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there's some softening. >> we're not growing any better than 2.5%, which has been the recovery right now for five years. 2.4%. we're not blasting off. it ain't going to happen. >> our forecast is we had been stuck in a 2% growth channel, because we're in the shadow of financial crisis and politicians just kept getting in the way. >> no, no -- >> and now going up to 2.75% sicklically. >> we have to abolish the corporate tax, vince. the fed can't do this. the fed creates money. >> if you do a list of the 15 things in washington -- c. that could be down, number 14th would be qe, numb 15 would be forward-rate guidance. >> number one would be corporate tax reform, maybe abolition. >> tax reform generally. we tax -- >> we'll get to another subject. let's top taxing saving and
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investment and start taxes consumption. many thanks to vince reinhardt, even if i put a few words in his mouth. stocks stayed flat all day. does that mean the wild ukraine volatility that is run its course? we'll talk to some money experts up next. there's a saying around here, you stand behind what you say. around here you don't make excuses. you make commitments. and when you can't live up to them, you own up, and make it right. some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where it's needed most. but i know you'll still find it when you know where to look. but with less energy, moodiness, and a low sex drive, i had to do something. i saw my doctor.
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after yesterday's record-breaking session it was steady as she goes today. the dow off 35, nasdaq up six, the s&p 500 flat on the day. joining me now ace cnbc contributors carol roth and peter costa. you heard vince reinhardt, one of the best monetary analysts around, he said long-term rates in his forecast are going from today, which is, what, 260 and change on the ten-year to 3.5%. i ask you, carol roth, right there. is that bullish or bearish for stocks? if that's true. >> normally i might have an outlook on it, but right now there's a bifurcation. you look at where the ten-year is trading, looking at stocks that continue to go higher. so joe know if i can correlate the two today, as i might be
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able to do at some other period of time. >> you really didn't answer the question. it's okay. i'm very keen on this. if long rates go up from 260 and changes to 3.5%, what does that do to stocks, in your opinion? up or down? >> in a normal market or in today's market? >> it's like pulling teeth. peter, same question. >> i'm going to help you out here, larry. i do feel that rates are going to be going up. i would say that's probably a very accurate forecast, but i'm not in that industry. but as far as stocks go, i do think that there will be some shakyness going forward as the rates start rising, but i do think the overall economy is still increasing and still getting better. >> bullish. i'll put a couple charts on the wall, charts that we used last night. i don't care about the weather, i don't care particularly about ukraine. maybe i'll care if something bad happens, i'm interested in
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profits, the mother's milk of stocks. corporate profits as share of gdp are at an all-time high. here's why. wages unfortunately have been coming down even while profits have been going up. wages are about 0%, 70% of business costs. when you take productivity and add it on to low wages, you have yourself a very profitable situation. i would argue, and again i don't like this argue, but if wages stay down, because the labor market is not tight, that's really good for profits, and really good for stocks, even though i don't like that. >> i think your argument is valid. i just don't think it's sustainable. i think that the profit levels that we have now are because companies have cut back. and when you go out and talk to people, there are people who are doing now two, three people's jobs. they used to have co-workers. now they're overworked and
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underpaid. they can only get away with it for so long a period of time, because people will get burned out. i don't think there's room for companies to continue to do that. >> i'm a growth guy. i really don't like this story, but i'm also a profits guy, and businesses are -- because it's a weak labor market, businesses are taking advantage of it. i have another chart. businesses have neff had better position. the debt to equity ratios have bakley deleveraged and collapsed. nonfinancial, all right? nonbanks corporate business debt to equity. look how much that has fallen. from 85% down to less than 50%. so peter, another bullish thing. if profits are rising, wages are moderate and the position is pristine. real quick. >> like carol said, i don't know if it's sustainable. right now it looks great on paper everything looks great. i think if we can continue
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this -- my bigger concern is about unemployment. if unemployment goes under 6%, then the wages will start pressuring. >> i agree. >> if consumers don't have the good jobs and the jobs don't come back, i think there's a lot of pressure on the consumers, a lot of debt out there. >> look at the corporate debt -- >> no, consumer debt. carol, peter, that's it for tonight. i'm larry kudlow. we'll be back. derwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪ my mom works at ge. phone: your account is already paid in full. oh, well in that case, back to vacation mode. ♪boots and pants and boots and pants♪
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>> narrator: in this episode of "american greed"... if there's one name in albuquerque real estate that's as solid as a rock, it's doug vaughan. >> we trusted him. we really trusted him. >> narrator: his real-estate investment program takes in $75 million from more than 600 investors. >> what doug did was he took their money and simply created the largest ponzi scheme in new mexico history. >> narrator: but hanging over this dream landscape of never-ending profits, a storm is coming. >> i recognize that i do face some serious challenges. >> everything was great, and then, all of a sudden, boom! talk about a crash and burn. >> narrator: when vaughan's only chance of keeping his head above water is to steal more money, he pulls the most vulnerable of new mexicans down with him. >> by the end, he's desperate.


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